Vedanta net profit down 12% at Rs 1351 crore in Q1 as expenses increase

Anil Agarwal-led Vedanta Ltd today reported a consolidated net profit of Rs 1,351 crore in June quarter, down 12 per cent from same period last year on lower revenue and higher expenses.

The company’s topline in the period under review stood at Rs 21,167 crore, down 3.5 per cent from same period last year. Meanwhile, total expenses on a consolidated basis grew 2.11 per cent in the June quarter at Rs 19,672 crore. Higher cost of material consumed and increased power and fuel cost led to the rise in overall expenses.

Under exceptional item, the net tax benefit of Rs 477 crore in the period under review lowered the net tax expense of the company to Rs 138 crore from Rs 886 crore in the same period last year. This lent support to the reported bottomline.

According to Bloomberg estimates, the company’s topline was seen at Rs 20,916 crore in the quarter gone by, while the bottomline was expected to be at Rs 1,335 crore.

The company’s EBITDA margin contracted to 27 per cent in the period under review as against 34 per cent in the same period last year.

Around 80-85 per cent of Vedanta’s total EBITDA comes from its zinc, lead, silver and zinc international business, while its loss-making copper and aluminium businesses contribute close to 10 per cent.

On a standalone basis, the company’s performance was dismal as it reported operational losses. However, upbeat zinc, lead, silver businesses of the domestic market along with zinc international business held the fort for Vedanta’s consolidated performance. 

Going ahead, the management expects second half of the year to be a better business period again on the back of continued effort to lower costs in aluminium business and upbeat estimates from zinc, lead and silver segment.

With regard to its steel business, which Vedanta has entered via acquisition of insolvent Electrosteel Steels, the management informed that the business has already turned around and that the company is now focusing on upping the plant capacity to 2.5 million tonne from present 1.5 million.

Vedanta's gross debt stood at Rs 59,517 crore on 30th June 2019, lower by Rs 6,708 crore as compared to March 31, 2019. This was mainly due to repayment of debt at Cairn India Holding Limited (CIHL), Vedanta Limited Standalone and temporary borrowings at Zinc India, said the company. Going ahead, Vedanta has no plans of refinancing its debt but instead will be focusing on capital allocation to increase efficiency and maximise profits.